SOLUTION: Dr. Sand borrowed some money to buy new furniture for her office. She paid $245.00 simple interest on a 3.5-year loan at 3.5%. Find the principal. I got $2,400 but I was tol

Algebra ->  Finance -> SOLUTION: Dr. Sand borrowed some money to buy new furniture for her office. She paid $245.00 simple interest on a 3.5-year loan at 3.5%. Find the principal. I got $2,400 but I was tol      Log On


   

Question 157726: Dr. Sand borrowed some money to buy new furniture for her office. She paid $245.00 simple interest on a 3.5-year loan at 3.5%. Find the principal.

I got $2,400 but I was told that is not correct. What have I done wrong?
Answer by vleith(2983) About Me  (Show Source):
You can put this solution on YOUR website!
Simple interest tells you that the annual interest the good Dr paid is 240/3.5 (the total interest divided by the 3.5 year term of the loan). That means Dr S is paying $70/year in interest.
Given an interest rate of 3.5%, we see that
70+=+Principal+%2A+0.035
+70%2F0.035+=+P
2000+=+P+
Check your answer.
In the first year, the Dr pays 70.
In the second, 70 more
In the third, yet another 70.
Then for 1/2 year, the Dr pays 70/2 = 35.
For a total of 70+70+70+35 = 245